Petroleum Technology News
First Quarter 2001 2000 Kansas Energy Report
For over 100 years, energy production has been a key component to Kansas' economy. For much of its history, Kansas has produced more energy than it has consumed. The gap between production and consumption, however, has narrowed to the point where in any given year there is no guarantee that Kansas will be a net energy exporter. Changes in technology, government, business, and price have provided, and will continue to provide, challenges and opportunities for the Kansas energy sector.
Total energy consumption has increased 41% since 1960 in Kansas. In 1960, Kansas was capable of producing all of the fuel it consumed. Today, only natural gas is produced in excess of consumption in the State. However, Kansas is more energy efficient than 20 years ago. In 1998, 70% less energy was required per dollar of gross state product than it was in 1977. Growth in total energy consumption slowed after 1980, while the State's economy has continued its rapid growth. Kansas and the U.S. are rapidly changing how energy is delivered as we move to increased dependence on electricity. Over the last 40 years, electricity's share of Kansas energy consumption has doubled from 15% to nearly 33%. With the restructuring of the electric industry and increasing uncertain environmental requirements, today's additions to baseload electric generation capacity are overwhelmingly combined-cycle or combustion turbine technology fueled by natural gas. This has resulted in an extremely rapid and accelerating growth in demand for natural gas for electric generation.
Kansans' consume around 1,100 trillion BTU of energy annually. The average use of energy per Kansan in 1997 was 397 million BTU, 13 percent above the US average rate of 351 million BTU. Fossil fuels supply over 90% of this. Petroleum accounts for a third of this energy with natural gas and coal providing around 30% each. Nuclear power, which fuels the Wolf Creek nuclear generating station, accounts for 8% of the total, while biomass comprises 1%. Hydroelectric and other sources of energy (e.g., wind and solar) comprise less than 1% of Kansas' energy consumption.
Petroleum consumption in Kansas is at 193,000 barrels per day, of which transportation fuels, gasoline, and distillate (diesel) have the largest shares. Given the rural nature of the state, liquid petroleum gases (LPG), primarily propane, are used extensively for rural heating and industrial purposes. Energy consumption by sector shows that industrial and transportation sectors are the two biggest consumers.
In all, Kansas is capable of producing 60% of the energy it consumes. Twice as much natural gas is produced in Kansas than is consumed. All of the uranium, most of the coal, and 40% of the petroleum consumed must be produced out of the state. As of 1997, assuming Kansas consumed its own energy first, around 40% of the energy consumed in the state was produced elsewhere. The single largest source is the coal produced in Wyoming and burned in our power plants. The majority of energy imported into Kansas is offset by export of natural gas.
Natural gas and petroleum remain the most important energy resources in Kansas, accounting for nearly all primary energy produced in the state. Energy production in Kansas peaked in 1967 at 1573 trillion BTU's. In 1999, a total of 912 trillion BTU of energy were produced in Kansas with 63% from natural gas (566 bcf), 22.0% from petroleum (34 million bbls), 11 % from natural gas liquids (NGL; 34.4 million bbls), and less than 1% from coal (414,000 short tons). Natural gas production peaked in 1970 at 900 billion cubic feet (bcf). Petroleum production peaked in 1956 at 124 million barrels (bbls). Of the U.S. states, Kansas is ranked 7th in natural gas production and 8th in oil production.
In 2000, hydrocarbon production responding to increased wellhead prices is estimated to have increased slightly from 1999 to over 34.3 million barrels of oil and 550 billion cubic feet of gas. The current year wellhead value of hydrocarbon production will increase over $1.4 billion from 1999 to an estimated wellhead value of $3.046 billion. The increased wellhead value of oil and gas production will have a positive impact on the Kansas economy and state and local tax revenues, and should be felt across the gas and oil producing counties of southeast, central, and western Kansas. However, this positive impact will be balanced by potentially serious effect of increased energy costs and potential spot shortages on the Kansas agricultural, chemicals industry, and general consumer economy. Shortages and price spikes are possible in natural gas and to a lesser extent in petroleum distillate products.
Energy is increasingly a national and global market dominated by high technology, high capital requirements and large integrated companies. Small and mid-sized companies, which must continue to innovate in order to compete, dominate the Kansas energy system. To meet the rapid changes in energy demand, Kansas must work to increase energy supply to prevent shortages and maintain reasonable costs. Kansas and U. S energy supply will continue to be dominated by fossil fuels. However, an economic and measured approach that integrates new energy sources (e.g., wind and ethanol production from agricultural production) into the Kansas energy system can have a positive impact. Increased synergy and efficiencies are possible among all the various aspects of the Kansas energy system.
In the short-term, Kansas and the U.S. are facing another
hydra-like energy crisis that seems to grow new heads every day.
With high prices and tight supplies of natural gas and distillates,
we are facing a "Winter of Discontent." In the past,
similar short-term energy situations have resulted in changes
of energy policy that did little to alleviate the fundamental
problems of supply and demand.
Acknowledgment. This article summarizes portions of a
report prepared for the Kansas Legislature by Tim Carr and Scott
White of the Kansas Geological Survey and KU Energy Research
Center. The report examines the history, current status, and
future of energy in Kansas. The complete report is available
on the North Midcontinent Internet website at: http://www.kgs.ku.edu/PRS/
publication/2000/ofr69/2000KS_Energy.html